According to a recent report by Standard & Poor’s Economic Research, Americans lost 18 percent of their net worth in 2008 and households nearing retirement were hit the worst. However, the report found that even before the recession, most Americans nearing retirement were ill prepared.

The Center for Retirement Research at Boston College estimates 43 percent of older Americans are likely to be unable to maintain the standard of living they are accustomed to after retirement. Three years ago, the average American expected to retire at 63-years old. Now, one third of Americans plan to continue working after the age of 65, according to the Retirement Confidence Survey conducted by the Employee Benefits Research Institute. In the last 12 months, 24 percent of workers have postponed their expected retirement age, citing the poor economy as the reason.

By the end of 2007, the median-household for Americans in the pre-retirement age group (55-64-years old) had total financial assets of only $72,400, according to the 2007 Survey of Consumer Finances (SCF). Only 58.4 percent of families in the same age bracket had saved any money in 2007. Their median net worth was $253,700, however, most of these funds are found in the family home, which is not a liquid asset and has had significant declination in value. These funds are simply not enough to last the 20 or more years of retirement.

Only 16 percent of American workers say they are “very confident” that they will be able to live comfortably after retirement. Many more workers, at 36 percent say they are “not too confident” or “not confident at all” they will be able to live well after retirement. Down from 65 percent in 2009, this year only 60 percent of workers said they or their spouse put away any money at all for retirement. Excluding their house and benefits from pension plans, 43 percent of Americans have less than $10,000 saved for retirement funds. Only 11 percent had more than $250,000 saved.

Unfortunately, Social Security and Medicare will not be much help. The 2009 projections by the trustees of the Social Security and Medicare trust funds indicate both funds will run out of money even sooner than projected in 2008. The new trustees’ report predicts the Social Security trust fund’s surplus will continue until 2015, but will more into a deficit shortly after, thanks to the increase of needs from the baby boomer generation. All funds are projected to run out by 2037, though an increase in retirement age could help to extend the funds, but would only postpone this problem.

The Medicare Hospital Insurance fund is already in deficit and is expected to run out of funds by 2017. Since Americans ages 65 and older qualify for Medicare, regardless if they are still working or not, this money will run out much faster than Social Security, even if retirement age is increased. The new health bill will affect Medicare estimates but currently it is unclear how effective that will be.

However, by working longer and postponing retirement ages, Americans may find a solution to these issues. The Social Security Act of 1935 set the retirement age at 65. At this time, life expectancy was 62-years old. Now it’s at 78-years old, meaning those who retire at age 65 average 18-20 years of life after retirement, which just may be too much for only 40 years of working.

Written by Kelly Mellott